What Is Real Estate Professional Status (REPS)?
REPS is a tax designation that allows real estate investors to classify rental activities as active rather than passive, enabling them to use real estate losses to offset W-2 and other income.
REPS Requirements
To qualify for REPS, investors must:
Spend 750+ hours per year in real estate activities.
Spend more time in real estate than in any other job.
Materially participate in real estate activities.
Tax Benefits of REPS
Depreciation can offset W-2 income.
No limit on real estate loss deductions.
Maximized tax-free cash flow from real estate investments.
How to Achieve REPS
Manage your own rental properties.
Actively participate in a syndication.
Ensure detailed time logs of real estate activities.
Final Thoughts
For high-income earners, achieving REPS can be a game-changer. Consult with a tax professional to determine if it makes sense for your situation.
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